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Saudi Arabia takes aim at consultancy services

Lots need to change with consulting firms to win back traction in Saudi Arabia

3 MIN READ

Saudi Arabia is insistent that consultancy firms need to hew to what's been asked of them. This will create a good deal of churn in the industry.

AFP

Saudi Arabia has become a critical market for global consulting firms, with Vision 2030 driving demand for strategic expertise.

However, the Public Investment Fund’s (PIF) recent decision to suspend a major global consulting firm until February 2026 signals a shift. While the exact reasons remain undisclosed, the broader message is clear: Saudi Arabia is reassessing its relationship with foreign consultants, demanding greater local impact, transparency, and long-term value creation.

Challenges facing consultancies in Saudi Arabia

Knowledge localization gap

For years, international firms have dominated Saudi Arabia’s consulting landscape, often delivering reports but failing to embed long-term expertise. Prince Abdulaziz bin Salman, Minister of Energy, has criticized this trend, highlighting the need for real knowledge transfer.

Despite the Kingdom having 6,000 consulting firms, only 5% are locally-owned. Without meaningful capacity building, foreign firms risk being seen as short-term fixes rather than long-term partners. The PIF decision underscores the urgency for firms to invest in local talent development.

Bias in hiring

Many Saudi professionals report being overlooked in favor of expatriates, often hired based on nationality rather than qualifications. While Saudization efforts have added 64,000 nationals to the workforce, high-skilled sectors like consulting remain expat-dominated.

As of March 2024, the government mandates 40% Saudization for consulting firms. However, enforcement remains inconsistent, particularly in middle management, where hiring decisions are influenced by personal networks.

The Kingdom has made it clear: localization must be more than a check-the-box exercise, it must empower Saudi professionals.

Stricter regulatory oversight

Saudi Arabia is not just introducing policies, it is actively enforcing them. The government is accelerating localization through:

Training programs: Initiatives like Tamheer, which has supported over 200,000+ Saudis.

Local firm development: The Local Content Authority is pushing for more Saudi-owned consultancies.

Stronger compliance standards: Firms that fail to meet localization and governance requirements face financial penalties and potential market bans.

For consulting firms, this means aligning with Saudi Arabia’s national objectives, or losing access to one of the world’s most lucrative markets.

The PIF decision is part of a broader transformation reshaping the industry. The traditional model, where large firms offer broad, high-level advice, is under increasing pressure.

Clients are becoming more selective

Governments and businesses demand measurable impact, not just theoretical frameworks. Consulting firms must now prove their value through tangible KPIs and RoI-driven results.

Regulatory scrutiny is increasing

Expect tighter compliance regulations, stricter localization mandates, and higher ethical standards, particularly in government, finance, and energy. Firms that fail to adapt will face reputational damage and lost revenue.

Smaller, highly specialized consultancies in aviation, fintech, and sustainability are winning contracts that once went to large firms. Their ability to provide tailored, cost-effective solutions makes them increasingly attractive to clients.

The consulting industry is not disappearing, but it must evolve. Firms that want to remain relevant in Saudi Arabia and beyond must embrace a new approach:

The era of one-size-fits-all consulting is ending. Firms with expertise in key sectors such as aviation, digital transformation, and supply chain resilience will thrive.

Clients expect clear KPIs, ROI models, and quantifiable results. Firms that can prove their value through data-driven insights will win more business.

Compliance failures now lead to bans, lawsuits, and reputational damage. Investing in internal governance structures is essential.

Consulting firms that leverage AI-driven analytics, automation, and digital tools will enhance efficiency, reduce costs, and stand out.

The PIF’s decision marks a turning point for Saudi Arabia’s consulting sector. Governments and businesses will no longer accept generic advice and weak localization efforts.

Over the next 12–24 months, the firms that specialize, prove impact, and strengthen governance will emerge as industry leaders. Those that resist change will struggle to stay relevant. For consulting firms, this is not a crisis.

It’s an opportunity. The future belongs to those who align with Saudi Arabia’s ambitions, invest in local talent, and deliver real, measurable value.

Linus Benjamin Bauer

The writer is founder of Bauer Aviation.

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